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Abridged audited consolidated financial statements for the year ended 31 March 2019,note of annual general meeting
Etion Limited
(“Etion” or “the company” or “the Group”)
(Incorporated in the Republic of South Africa)
(Registration Number: 1987/001222/06)
Share Code: ETO
ISIN: ZAE000257739
Abridged Audited Consolidated Financial Statements
for the year ended 31 March 2019 and notice of annual general meeting
(KEY FEATURES)
- Revenue increased to R595.9 million from R572.6 million (up 4%)
- Gross profit margin increased from 28.3% to 30.3% (up 2%)
- EBITDA decreased from R60.7 million to R29.9 million (down 51%)
- Profit after tax decreased from R33.4 million to a loss of R2.7 million
(down 108%)
- Headline and Basic Earnings per share decreased from 7.26 cents to a
loss of 0.53 cents (down 107%)
Page 1 of 9
Abridged consolidated statement of financial position
As at 31 March 2019
31 March 2019 31 March 2019 31 March 2018
(Audited) (Reviewed) (Audited)
R’000 R’000 R’000
Assets
Non-current assets 261 831 264 161 184 569
Property, plant and equipment 48 455 48 455 50 294
Intangible assets 191 421 191 421 118 543
Loan to related company - 2 330 -
Deferred tax asset 20 945 20 945 14 722
Other financial asset 1 010 1 010 1 010
Current assets 330 613 327 239 285 379
Inventories 87 549 90 305 88 276
Loan to related company 2 330 - -
Trade and other receivables 163 630 163 630 140 790
Contract assets 18 927 16 171 -
Current tax receivable 7 566 6 522 5 513
Cash and cash equivalents 50 611 50 611 50 800
Total assets 592 444 591 400 469 948
Equity and liabilities
Equity 343 294 343 066 302 446
Share capital 259 541 259 541 212 141
Accumulated profit 83 753 83 525 90 305
Non-current liabilities 42 542 41 724 32 952
Interest bearing borrowings 32 968 32 967 27 788
Contract liabilities 274 274 -
Deferred tax liability 9 300 8 483 5 164
Current liabilities 206 608 206 610 134 550
Provisions 1 890 1 890 5 388
Interest bearing borrowings 43 522 43 523 9 461
Trade and other payables 132 175 132 176 110 155
Contract liabilities 14 918 14 918 -
Current tax payable 970 970 -
Bank overdrafts 13 133 13 133 9 546
Total equity and liabilities 592 444 591 400 469 948
Page 2 of 9
Abridged consolidated statement of comprehensive income
For the year ended 31 March 2019
Year Year Year
ended ended ended
31 March 2019 31 March 2019 31 March 2018
(Audited) (Reviewed) (Audited)
R’000 R’000 R’000
Revenue 595 939 595 939 572 562
Cost of sales (415 326) (415 325) (410 379)
Gross profit 180 613 180 614 162 183
Other operating income 4 877 4 877 2 276
Administrative and operating
costs (166 360) (165 151) (125 787)
Other (losses)/gains (8 956) (8 956) 7 849
Operating profit 10 174 11 384 46 521
Finance income 1 717 1 717 1 975
Finance costs (11 262) (11 262) (6 143)
Profit before taxation 629 1 839 42 353
Taxation (3 359) (4 743) (8 929)
Net (loss)/profit for the
period (2 730) (2 904) 33 424
Total comprehensive
(loss)/income for the period (2 730) (2 904) 33 424
Attributable to:
Equity holders of the company (2 730) (2 904) 33 473
Non-controlling interest (49)
(2 730) (2 904) 33 424
Basic earnings per share (cents) (0.53) (0.56) 7.26
Diluted earnings per share
(0.53) (0.56) 7.26
(cents)
Page 3 of 9
Abridged consolidated statement of cash flows
For the year ended 31 March 2019
Year Year Year
ended ended ended
31 March 31 March 31 March
2019 2019 2018
(Audited) (Reviewed) (Audited)
R’000 R’000 R’000
Cash flows from operating
activities
Cash receipts from customers 561 283 561 283 556 150
Cash paid to suppliers and
employees (527 513) (527 513) (555 460)
Cash generated from operations 33 770 33 770 690
Finance costs (4 668) (4 668) (6 143)
Finance income 1 717 1 717 1 975
Taxation paid (11 277) (11 277) (23 110)
Net cash flow from operating
activities 19 542 19 542 (26 588)
Cash flows from investing
activities
Purchase of property, plant and
equipment (2 921) (2 921) (4 942)
Proceeds from disposal of
property, plant and equipment 435 435 1 169
Purchase of intangible assets (10 514) (10 514) (7 578)
Business combinations, net of
cash acquired (63 103) (63 103) -
Net cash flow from investing
activities (76 103) (76 103) (11 351)
Cash flows from financing
activities
Proceeds on share issue 27 300 27 300 -
Proceeds from interest bearing
borrowings 58 038 - 972
Repayment of interest bearing
borrowings (25 391) 32 647 (5 536)
Net cash flow from financing
activities 59 947 59 947 (4 564)
Net (decrease)/increase in cash,
cash equivalents and bank
overdrafts 3 386 3 386 (42 503)
Cash, cash equivalents and bank
overdrafts at beginning of year 41 254 41 254 79 235
Unrealised foreign exchange
adjustment (7 162) (7 162) 4 522
Cash, cash equivalents and
bank overdrafts at year end 37 478 37 478 41 254
Page 4 of 9
Abridged consolidated statement of changes in equity
For the year ended 31 March 2019
Issued
share Accumulated Minority
capital profit/(losses) interest Total
R’000 R’000 R’000 R’000
Balance as at 1 April 2017
(Audited) 212 141 56 652 229 269 022
Movements during the year
Profit for the year - 33 473 (49) 33 424
Buy back of minority interest
180 (180) -
shares in subsidiary
Balance as at 1 April 2018,
212 141 90 305 - 302 446
as previously reported
Adjustment from adoption of
- (3 876) - (3 876)
IFRS 9, net of tax
Restated balance as at 1
April 2018 212 141 86 429 - 298 570
Movements during the year
Shares issued as part of the
business combination 20 100 - - 20 100
Shares issued for cash 27 300 27 300
Loss for the year (2 904) (2 904)
Balance as at 31 March
259 541 83 525 - 343 066
2019 (Reviewed)
Issued
share Accumulated Minority
capital profit/(losses) interest Total
R’000 R’000 R’000 R’000
Balance as at 1 April 2017
(Audited) 212 141 56 652 229 269 022
Movements during the year
Profit for the year - 33 473 (49) 33 424
Buy back of minority interest
180 (180) -
shares in subsidiary
Balance as at 1 April 2018,
212 141 90 305 - 302 446
as previously reported
Adjustment from adoption of
- (3 822) - (3 822)
IFRS 9, net of tax
Restated balance as at 1
April 2018 212 141 86 483 - 298 624
Movements during the year
Shares issued as part of the
business combination 20 100 - - 20 100
Shares issued for cash 27 300 27 300
Loss for the year (2 730) (2 730)
Balance as at 31 March
259 541 83 753 - 343 294
2019 (Audited)
Page 5 of 9
Abridged consolidated segment report
For the year ended 31 March 2019
Year Year Year
ended ended ended
31 March 31 March 2019 31 March
2019 2018
(Audited) (Reviewed) (Restated*)
(Audited)
R’000 R’000 R’000
Segment revenue
Etion Digitise: Safety and Productivity
95 819 95 819 77 035
Solutions
Etion Create: Original Design Manufacturing 206 565 206 565 235 775
Etion Connect: Digital Network Solutions 246 748 246 748 277 547
Etion Secure:Cyber Security Solutions -
106 967 106 966
(LawTrust)
Eliminations (60 160) (60 159) (17 795)
Total 595 939 595 939 572 562
Segment profit/(loss)
Etion Digitise: Safety and Productivity
(834) (834) (8 276)
Solutions
Etion Create: Original Design Manufacturing 20 188 20 189 38 375
Etion Connect: Digital Network Solutions 13 267 13 267 30 588
Etion Secure:Cyber Security Solutions
5 412 5 373 -
(LawTrust)
Eliminations 20 869 22 117 6 255
Sub total 58 902 60 112 66 942
Corporate costs (48 728) (48 728) (20 421)
Finance costs (11 262) (11 262) (6 143)
Finance income 1 717 1 717 1 975
Profit before taxation 629 1 839 42 353
Financial position
Assets 592 444 591 400 469 948
Etion Digitise: Safety and Productivity
93 185 95 956 91 570
Solutions
Etion Create: Original Design Manufacturing 205 108 278 520 235 627
Etion Connect: Digital Network Solutions 162 904 134 740 142 645
Etion Secure:Cyber Security Solutions
119 045 52 853 -
(LawTrust)
Corporate 12 202 29 331 106
Liabilities 249 150 248 334 167 502
Etion Digitise: Safety and Productivity
30 485 30 092 24 922
Solutions
Etion Create: Original Design Manufacturing 80 807 80 246 97 108
Etion Connect: Digital Network Solutions 69 140 66 887 45 470
Etion Secure:Cyber Security Solutions
29 987 27 845 -
(LawTrust)
Corporate 38 731 43 264 2
* Due to the material increase of R60,1 in intersegment transactions during the current financial year the
Group has revised the manner in which it reports segment information for the four business segments.
Intersegment transactions are now eliminated on a gross basis and not directly from the results of the business
segment to which it relates. The comparative information for the 2018 financial year has been restated.
Page 6 of 9
NOTES TO THE FINANCIAL INFORMATION
1. Restatement of reviewed results for the year ended 31 March 2019
The reviewed financial results for the year ended 31 March 2019 which was released on SENS
on 25 June 2019, has been restated due to the following items:
- The reclassification of work in progress in respect to contacts with customers
previously included under inventory on the Statement of Financial Position to contract
assets, arising from the implementation of IFRS 15.
- The reclassification of loans to related parties from non-current assets to current
assets due to the nature of the repayment terms.
- The incorrect treatment of an eliminating journal entry processed upon consolidation
which has resulted in a net movement of R0.2m in the Statement of Comprehensive
Income and related movements in current tax receivable and deferred tax liability in
the Statement in Financial Position.
- Separate disclosure of the proceeds from interest bearing borrowing and repayments
made during the year on the Statement of Cash Flows.
- Minor rounding differences on individual figures with the finalisation of the financial
statements.
As a result of the aforementioned, Headline and Basic Earnings per Share has improved from
a loss of 0.56 cents to a loss of 0.53 cents (107% reduction from prior year).
There were no material changes to the Statement of Cash Flows and hence there was no
change to any of the key indicators that relate to this. However, while cash generated from
operations remained unchanged, due to the changes in the Statement of Comprehensive
Income, the movements in working capital changes has been affected. The effect on the
individual line items are contained in the notes below.
1.1 Notes to cashflow statement
In the note “cash generated from operations” the changes are as follows:
Year Year Difference
Ended Ended
31 March 2019 31 March 2019
(Audited) (Reviewed)
R’000 R’000 R’000
Profit before tax 629 1 839 (1 210)
Adjustments For:
Depreciation and amortisation 19 687 19 687 -
Interest income (1 717) (1 717) -
Finance costs 11 262 11 262 -
Increase in provision for slow moving and
obsolete raw materials (1 766) (1 766) -
Increase/(decrease) in provision for
impairment of trade receivables 3 204 3 204 -
Loss on sale of property, plant and
equipment 13 13 -
Operating lease straight line adjustment 1 414 1 414 -
(Decrease)/increase in provisions (3 498) (3 498) -
Unrealised foreign exchange differences -
cash and bank equivalents 7 162 7 162 -
Unrealised foreign exchange differences -
debtors (66) (66) -
Unrealised foreign exchange differences -
trade creditors 3 499 3 498 1
Page 7 of 9
Changes in Working Capital
Inventories (6 474) (9 230) 2 756
Contract assets (1 131) 1 625 (2 756)
Trade and other receivables 6 455 6 680 (225)
Trade and other payables (7 256) (8 690) 1 434
Contract liabilities 2 353 2 353 -
Cash generated from operations 33 770 33 770 -
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION
The summary consolidated financial statements are prepared in accordance with the requirements
of the JSE Limited Listings Requirements for abridged reports, and the requirements of the
Companies Act applicable to summary financial statements. The Listings Requirements require
abridged reports to be prepared in accordance with the framework concepts and the measurement
and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and to also, as a
minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting
policies applied in the preparation of the consolidated financial statements from which the
summary consolidated financial statements were derived are in terms of International Financial
Reporting Standards and are consistent with those accounting policies applied in the preparation of
the previous consolidated annual financial statements, except for the effect of the adoption of IFRS
15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments with effect from 1
April 2018.
AUDIT REPORT
This summarised report is extracted from audited information but is not itself audited. The annual
financial statements were audited by PricewaterhouseCoopers Inc., who expressed an unmodified
opinion thereon. The audited annual financial statements and the auditor’s report thereon are
available for inspection at the company’s registered office.
The directors take full responsibility for the preparation of the abridged report and that the
financial information has been correctly extracted from the underlying annual financial statements.
PREPARER
These results were prepared by N Naidoo CA(SA) under the supervision of EC De Kock FCMA.
GOING CONCERN
The directors have reviewed the group’s budget and cash flow forecast for the year to March 2020.
On this basis and considering the group’s current financial position, the directors are satisfied that
the group will continue to operate for the foreseeable future and have adopted a going concern
basis in preparing these reviewed provisional financial results.
ISSUE OF AUDITED ANNUAL FINANCIAL STATEMENTS AND ANNUAL GENERAL MEETING
In compliance with section 3.22 of the JSE Listing Requirements shareholders are advised that the
Company’s 2019 integrated annual report, which incorporates Etion’s consolidated financial
statements for the year ended 31 March 2019, was posted to shareholders on Wednesday, 31 July
2019. Shareholders are further advised that the integrated annual report will be made available
Page 8 of 9
on the Company’s website (www.etion.co.za) on the same day.
Notice is hereby given that the annual general meeting of the shareholders of Etion will be held on
Thursday 26 September 2019 at 10h00 at 85 Regency Drive, Route 21 Corporate Park, Irene,
Pretoria to deal with the business as set out in the notice of annual general meeting forming part
of the annual report.
Record date for the purpose of determining which shareholders are entitled to receive the notice of
annual general meeting; Friday, 26 July 2019
Mailing of integrated annual report; Wednesday, 31 July 2019
Last day to trade for the purposes of being entitled to attend, participate in and vote at the annual
general meeting; Tuesday 17 September 2019.
Record date on which members must be recorded as such in the register; Friday,20 September
2019
Proxy forms to be lodged with the transfer secretaries by 10:00 Monday, 23 September 2019*
* Any form of proxy not delivered to the transfer secretaries by this time may be handed to the
chairman of the annual general meeting prior to the commencement of the annual general
meeting.
By order of the board
Teddy Daka Elvin De Kock
Chief Executive Officer Chief Financial Officer
31 July 2019
Directors
CP Bester; T Daka (CEO)*; Dr. SJ Khoza; EC De Kock* (CFO); MJ Janse Van Rensburg ; RC Willis ;
C Maherry*
*Executive
Company secretary
Fusion Corporate Secretarial Services (Pty) Ltd
Telephone: +27 12 749 1800
Facsimile: +27 12 665 2767
Website: www.etion.co.za
Registered office: 85 Regency Drive, Route 21 Corporate Park, Irene, Pretoria 0157
(PO Box 95361, Waterkloof, Pretoria)
Designated adviser: Exchange Sponsors 2008 (Pty) Ltd
Transfer secretaries: Computershare Investor Services (Pty) Ltd
https://senspdf.jse.co.za/documents/2019/jse/isse/etoe/Abridged.pdf
Page 9 of 9
Date: 01/08/2019 08:34:00
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